With the tax season in full swing, and filing deadlines quickly approaching, Perfect Balance Booking & Tax Services is here to take the stress out of what can be a complicated and confusing process for many business owners. When filing business taxes, it is easy to miss key details that can result in lost opportunities for deductions, incorrect calculations, and even future audits. The best way to avoid these mistakes is to hire a trusted tax professional.
To give you an idea of some of the mistakes that can be avoided by hiring Perfect Balance Bookkeeping & Tax Services, today’s blog covers six common tax details that business owners miss. Our experienced team is dedicated to ensuring that all of your tax needs are fulfilled, helping to relieve the stress of tax season. Request a consultation with our Perfect Balance Bookkeeping & Tax Services team today for assistance with your taxes!
1. Understanding Cost of Goods
Misunderstanding the key differences between cost of goods and general expenses often leads to this common filing mistake. If a business owner under reports their cost of goods on their tax return, they may be missing out on beneficial deductions. However, the more serious issue is the common mistake of over reporting their cost of goods for the year. If a business is audited by the IRS, they will need to prove that they correctly reported their cost of goods on their filed business taxes, so this is a tax detail that demands accuracy.
2. Home Office Deductions
Most business owners know that their home office is deductible, but properly reporting this deduction is not as easy as it may seem. Depending on the type of home office you have, how it is used, and how much it costs, you may be under or over calculating the deduction. With many more business owners moving to home offices in 2020 because of COVID-19, knowing how to properly report this deduction on your business taxes is more important than ever to ensure proper filing.
3. Reporting Meal Expenses
Properly claiming meal deductions for a business can be complicated and overwhelming. There are different kinds of meal deductions, and it is imperative that you know which one you’re reporting because each category results in a different deduction. Some meals are fully deductible, some are only partially deductible, and some are nondeductible. Incorrectly claiming meal expenses on your business taxes is a major red flag to the IRS, and can lead to an audit in the future. The best way to avoid this potentially costly mistake is to hire a trusted tax professional.
4. Claiming Vehicle Expenses
What counts as a business vehicle, and how do you properly claim one? There are many details that can easily be missed, or misunderstood, when filing this deduction because there are very specific and rigid qualifications for what can be considered a business vehicle. Many business owners fail to report this tax deduction correctly, which can lead to an IRS audit in the future.
5. Bad Debt Deduction
Most business owners will have bad debt at some point. At the end of the year, they might be left with uncollected accounts receivables. This is known as bad debt, and it can be deducted when filing business taxes if properly reported. This detail is commonly missed because many individuals simply don’t know how to handle this, but ignoring it means missing out on a useful tax write-off. With the help of a tax professional, you can ensure that any bad debt is deducted properly.
6. Reporting Credit Card Interest
Did you know that the interest paid on a business credit card is deductible? This is another common deduction that business owners miss out on when filing their own business taxes. When Perfect Balance Bookkeeping & Tax Services works on your taxes, they ensure that you claim the deductions that you’re eligible for, so you won’t have to worry about missing out.
Hiring Perfect Balance Bookkeeping & Tax Service brings you peace of mind because you can be assured that your taxes have been correctly filed for the year. Avoid the stress and uncertainty, request a consultation with our Perfect Balance Bookkeeping & Tax Services team today!